This week over half of the truck drivers in India walked off the job, ultimately paralyzing commerce. Truckers could not afford to drive because ATMs in India ran out of money. Indians had begun withdrawing cash out of fear of the Indian government’s plan to call in large denomination bills. The government is withdrawing 500-rupee and 1000-rupee bills (1000-rupees is worth slightly less than $15.00) which accounted for over 85% of the bills in circulation.
The old bills will be replaced by new 500-rupee and 2000-rupee bills. By calling in large bills, Prime Minister Modi intends to force savers to put their cash in the bank, where it can be taxed. Over 20% of the Indian GDP is beyond the current reach of taxation. Already $44 billion has been placed in new bank deposits, which could be subject to tax if not previously reported as income. Unfortunately, this recall of bills has caused a cash panic that is paralyzing commerce, halting the flow of goods, and has created a huge surge in the demand for gold.
There is a worldwide push by the global elites to stop tax evasion and push all commerce to credit cards. Over the long term, this will be very bullish for gold |
